The Wages of Oil: Parliaments and Economic Development in Kuwait and the UAE

By Michael Herb

The contrast between Kuwait and the UAE today illustrates the vastly different possible futures facing the smaller states of the Gulf. Dubai's rulers dream of creating a truly global business center, a megalopolis of many millions attracting immigrants in great waves from near and far. Kuwait, meanwhile, has the most spirited and influential parliament in any of the oil-rich Gulf monarchies.

In The Wages of Oil, Michael Herb provides a robust framework for thinking about the future of the Gulf monarchies. The Gulf has seen enormous changes in recent years, and more are to come. Herb explains the nature of the changes we are likely to see in the future. He starts by asking why Kuwait is far ahead of all other Gulf monarchies in terms of political liberalization, but behind all of them in its efforts to diversify its economy away from oil. He compares Kuwait with the United Arab Emirates, which lacks Kuwait’s parliament but has moved ambitiously to diversify.

This data-rich book reflects the importance of both politics and economic development issues for decision-makers in the Gulf. Herb develops a political economy of the Gulf that ties together a variety of issues usually treated separately: Kuwait's National Assembly, Dubai's real estate boom, the paucity of citizen labor in the private sector, class divisions among citizens, the caste divide between citizens and noncitizens, and the politics of land.

• Language: English
• Publisher: Cornell University Press
• Release date: Dec 18, 2014
• ISBN: 9780801454684

Book preview

The Wages of Oil

Parliaments and Economic Development in Kuwait and the UAE

Michael Herb

Cornell University Press

Ithaca and London

To Aqil and Yasmeen

Contents

List of Tables and Figures

Acknowledgments

Note on Transliteration

Two Models

1. Labor Markets and Class Politics

2. Participation

3. Explaining Kuwaiti Exceptionalism

4. The Consequences of Absolutism

5. The Consequences of Participation

6. What Resource Curse?

Dilemmas of Development and Democracy in the Gulf

References

Index

Tables and Figures

Tables

2.1. Representative assemblies in the Gulf monarchies

3.1. Composition of state revenues around 1906

3.2. Pearling fleets, population, and armed retainers in the Gulf shaykhdoms

3.3. Visits by British flagged steamers to the Gulf shaykhdoms

3.4. Time line of the 1962 Kuwaiti constitution

5.1. Cost to export a container

5.2. Quality of port infrastructure

Figures

I.1. Net foreign direct investment flows

I.2. Rent abundance versus rent dependence

I.3. Rent abundance versus rent dependence, fuel and mineral export data

I.4. Rents per citizen in the richest rentiers

1.1. Percentage of UAE citizen men and women in the labor force

1.2. Female UAE citizen labor-force participation by level of education

1.3. UAE workforce by citizenship and sector

1.4. UAE population pyramid

1.5. Wages paid to government workers as percentage of government oil revenue in Kuwait

1.6. Bahraini workforce by citizenship and sector

1.7. Qatari workforce by citizenship and sector

1.8. Average expatriate wages as percentage of average Bahraini citizen wages, by educational level

4.1. Per citizen oil production in Gulf monarchies

4.2. Population growth in the UAE

4.3. Change in total population in five Gulf monarchies

5.1. Land purchases as percentage of all Kuwaiti government expenditures

5.2. Annual tourist arrivals in the Gulf

5.3. Value of merchandise exports from the Gulf, except fuels

5.4. Air freight in the Gulf

5.5. Air passengers carried in the Gulf

5.6. Value of petroleum exports

5.7. Value of total GCC stock market capitalization of banks and financial firms

5.8. Market capitalization of banks and investment firms on GCC stock markets

Acknowledgments

This book has its genesis in several trips back and forth from Kuwait to Dubai in 2007 while I was in Kuwait on a Fulbright research fellowship. The trips were funded in part by a Research Initiation Grant from my home institution, Georgia State University. In Kuwait, I was hosted by the American University of Kuwait. An earlier version of some of the arguments in this book appeared in the August 2009 issue of the International Journal of Middle East Studies.

I have received invaluable help from many people in writing this book. I have had the opportunity to present various parts of this book at workshops, conferences, and lectures. Feedback from colleagues at these events has helped me sharpen my arguments and avoid mistakes. These events have included talks given at Kuwait University (organized by Khaled Al-Fadhel), at Yale University (Ellen Lust), Sciences Po (Steffen Hertog), the Center for Strategic and International Studies (Jon Alterman); the University of Olso (Bjørn Utvik and Jon Nordenson), Florida International University (Russell Lucas); the Project on Middle East Political Science at George Washington University (Marc Lynch), the Moulay Hicham Foundation, and the American University in Kuwait (Farah Al-Nakib). I presented a version of chapter 1 at the Gulf Research Meeting of the Gulf Research Center in July 2010; the workshop was organized by Steffen Hertog and Rola Dashti. Participants at the University of Chicago Comparative Politics Workshop read an early draft of chapter 3, and it is better as a result. Others who have helped include Abdulkhaleq Abdulla, Abdul Hamid al-Ansari, Hassan Mohammed Al Ansari, Mohammed Al-Dallal, Yousef Al-Ebraheem, Khaled bin Sultan Al-Essa, Ibtisam al-Ketbi, Mohammad Al-Moqatei, Odah Al-Rowaie, Anas Al-Rushaid, Nasser Al-Sane, Khalid bin Jabor Al Thani, Ghanim al-Najjar, Mohammed Al-Rokn, Abd al-Rahim al-Shahin, Omar Al-Shehabi, Barbara Bibbo, Saad Bin Tefla, John Duffield, Hasan Johar, Shana Marshall, Jennifer McCoy, Pete Moore, Mary Ann Tétreault, and Sean Yom. Hamza Olayan of al-Qabas generously allowed me to consult the newspaper’s archives. I am indebted to Steffen Hertog and Greg Gause for their extensive and extremely useful comments on a draft of the manuscript, and to Roger Haydon and the team at Cornell University Press. And thanks to Francis Cox for providing the cover photo.

My children, Aqil and Yasmeen, have been hearing about the book for a very long time—and here it is, at long last. I dedicate it to them. They mean the world to me. My wife Kathryn provided more support and encouragement than I can properly thank her for; she makes me happy.

Note on Transliteration

In transliterating the titles of Arabic sources, I have used a system based on that of the International Journal of Middle Eastern Studies. For place names, I have used the transliterations commonly in use on street signs and in other English language sources (thus, Shuwaikh, not Shuwaykh). For personal names, I have used the transliteration that appears to be favored by the individual him- or herself, as evidenced by websites, business cards, and the like.

Two Models

There are no accomplishments [of the National Assembly in promoting the private sector] because of a great imbalance lying in the nature of those who vote in elections. A majority of them are employees of the state or its enterprises.… The role of the deputy changes… to a role resembling that of a member of a union of government employees, and the National Assembly gradually becomes a large union for the employees of the government and its enterprises.

— Abdulwahab al-Haroun, former deputy in the Kuwaiti National Assembly

Not long ago, before oil, Kuwait and Dubai shared much in common; both were small trading ports on the Gulf littoral, dependent on pearling and trade, and ruled by Arab families under British tutelage. Both had thriving merchant communities and an economy oriented toward trade and the sea. Today they are very different places. Dubai is an internationally famous entrepôt, tourist destination, and showplace for ostentatious architecture. Partly because of its relatively limited oil wealth, Dubai has led the United Arab Emirates (UAE) in diversifying its economy beyond oil, building a vibrant entrepôt economy that attracts foreign visitors and residents from far and wide. Yet the UAE—in which Dubai is one of seven emirates—remains one of the least democratic countries in the world. Kuwait, by contrast, has none of the economic vitality of the UAE, but it has a parliament (the National Assembly) that is by far the most potent among the six Gulf monarchies. The Kuwaiti economy, however, remains almost entirely dependent on oil.

In this book, I offer an explanation for the divergent paths followed by Kuwait and the UAE. Explaining this puzzle is interesting in itself, but it also gives us a window on the underlying political economy of the Gulf. My goal is to set out a framework for understanding the distinctive politics and economics of the Gulf monarchies, one that explains how the often-competing interests of rulers, capitalists, citizens, and expatriates take shape in Gulf states with more or less political participation and in those with more or less oil rent per capita. I argue that:

The Gulf rentiers should be divided into two groups. The first group is the extreme rentiers—Kuwait, the UAE, and Qatar—which enjoy the highest per capita rent incomes in the world. The second group is the not-quite-so-rich middling rentiers—Saudi Arabia, Oman, and Bahrain.

The three extreme rentiers enjoy so much oil wealth that the state can employ nearly nine of every ten citizens who work for a wage, and the state can do this without imposing taxes on the private sector. This defines—and in a peculiar way—the class interests of a majority of citizens.

Alone among the Gulf Cooperation Council (GCC) monarchies,¹ Kuwait has a strong parliament. This is largely due to an exogenous factor—the Iraqi threat to Kuwaiti sovereignty at independence and then again in the early 1990s.

In Kuwait, the parliament gives the citizen majority a voice in determining economic policy. This results in a set of economic policies very different from those found in the UAE and Qatar.

In the absence of a powerful parliament, the ruling families of the UAE are free to pursue their interests as the dominant local capitalists; at the extreme, the result is Dubai.

The contrast between Kuwait and the UAE today illustrates the vastly different possible futures facing the smaller Gulf states. If we extrapolate current trends, in some reasonably possible—even likely—future the northern emirates of the UAE will become a truly global business center, a megalopolis of many millions attracting immigrants in great waves from near and far. Kuwait, meanwhile, might just defy the odds (and the literature on the rentier state) and democratize. The great challenge faced by the richest Gulf rentiers is how to combine economic vitality and political participation, a feat that none appears likely to accomplish anytime soon, although Kuwait is perhaps better positioned than the UAE.

The Dubai Model and the Kuwait Model

At the height of the Dubai boom, Mohammed bin Rashid, the ruler of Dubai, dreamed big. He sought to build a world city, a thriving metropolis where, not so long before, there had been only a village. He planned a business district to rival Manhattan or Ginza, and he planned to build new cities on reclaimed land in the Gulf that would have a population upward of a million. He accomplished much before the real estate crash. Under his watch, Dubai came to have one of the busiest airports in the world and one of the busiest container ports, attracted a startling number of tourists, and made itself into a logistics and business hub for the Gulf and well beyond. Mohammed bin Rashid made Dubai into a brand known around the world. This was achieved in a place that not so long before had been not much more than a village. (In 1950, Dubai had a population of 53,000.² A British official described the Trucial Coast generally as having many attractions for the traveler from the West who does not attach too much importance to his personal comfort.³) In 2006, Abdulkhaleq Abdulla, an Emirati scholar, said that Dubai was in the midst of its moment in history.⁴ The real estate and financial crash dented the growth of Dubai, but a few years after the crash, the economy was showing renewed vigor based on the strength of its logistics and tourism sectors.

All this business growth required—and still requires—people: laborers, rent-ers, business owners, property purchasers, and more. By the middle of the 2000s Mohammed bin Rashid’s dreams had long outgrown the available citizen population of his country, all of whom could live on the largest of his planned palms in the Gulf, with room to spare. By 2011, foreigners outnumbered citizens in the UAE by a ratio of nine to one.⁵ This, understandably, left citizens feeling overwhelmed. It is as if 2.7 billion noncitizens lived in the United States alongside its 300 million or so citizens—with a billion or so having arrived in the past decade. This sort of comparison, of course, has its limits; scale matters. But we should take the comparison seriously before dismissing Emirati citizens’ concerns about the demographic imbalance in their country as nativist xenophobia. The debate over demography should not be seen through the prism of the debates in developed democratic countries between those who want limited immigration and those who want none. The shaykhdoms on the Gulf littoral have always been cosmopolitan societies open to the rest of the world; many of the citizens of the UAE today see the question as one not of maintaining the traditional openness of their societies but, instead, of reducing their nation to a small caste of nationals⁶ in a sea of foreigners. As one prominent Emirati intellectual put it, after pointing out that the progress of Dubai filled him with pride, [we] fear that we may lose everything that we have built. This feeling comes from the fact that we are a small minority in a city that’s full of foreigners. We are very scared.⁷

Kuwait, by contrast, has not experienced a Dubai-style boom. Instead, the distinction of Kuwait among the Gulf monarchies lies in its politics. Over the past few years, the National Assembly and the ruling family have competed for control of the government, and the ruling family has made substantial concessions. In recent years, the prime minister—also a member of the ruling family—has agreed to submit to votes of confidence in the National Assembly, admitting the principle that the government relies on parliamentary support. The opposition boycott of elections in late 2012 and in 2013 allowed the ruling family to regain its footing but not to reverse the institutional gains of the National Assembly. Unlike the other Gulf monarchies, Kuwait has made perceptible progress toward democracy, a point I make in more detail in chapter 2, where I also address the democracy scores of Kuwait and the UAE based on democracy rankings widely used by political scientists.

Despite the progress of Kuwait toward democracy, Kuwaiti capitalists today invest their money any place but in Kuwait, fleeing an investment environment that they increasingly view as hopelessly hostile (as evidenced, for example, by the dismal record of Kuwait in attracting foreign direct investment; see figure I.1). And Kuwaiti capitalists largely agree on whom to blame—the deputies in the National Assembly. Some go further and blame, in particular, the majority of Kuwaiti voters who rely on state oil riches for their paychecks and evince little interest in the sort of growth seen elsewhere in the Gulf. Most Kuwaitis who work for a salary are employed by the state or state-owned enterprises (SOEs) and thus rely directly on the oil wealth of the state for both their paychecks and for generous public services (this is also true of the citizens of the UAE, including those in the poorer emirates). Most private-sector development, as a direct consequence, does not benefit middle class Kuwaiti citizens; a tourist industry, for example, would employ very few Kuwaitis and generate little or no tax revenue. As a result of this dynamic, Kuwaiti politics is characterized by a surprisingly high level of outright class conflict between the publically employed middle class and the merchant capitalists. And this conflict is being won by the state employees via their influence in the popularly elected National Assembly.

FigureI_1.png

Fig. I.1 Net foreign direct investment flows ([inward FDI flows] minus [outward FDI flows]), 2000–2012. United Nations Conference on Trade and Development (UNCTAD), Inward and Outward Foreign Direct Investment Flows, Annual, 1970–2012, http://unctadstat.unctad.org.

From the point of view of Kuwaiti citizens the absence of a Dubai-style boom has had at least one advantage: although Kuwaitis are a minority in their own country, the country’s demographic structure is not nearly as unbalanced as that of the UAE (or Qatar). And the foreigners in Kuwait are mostly there to provide services to Kuwaitis rather than to ensure the profitability of the ruling family’s real estate developments. A visitor to Kuwait feels the difference immediately; it is a city oriented toward satisfying the needs of its middle-class citizens. Dubai, by contrast, often feels like a city focused more on foreigners (especially those with money) than on its citizens, who can often be hard to find.

Of these two models, Kuwait and Dubai, it is quite clear which has been more influential in recent years in the Gulf—and it is not the Kuwaiti model of expanded political participation.⁸ The ruling families of Abu Dhabi and Qatar are attracted to the economic diversification and international branding pioneered by Dubai.⁹ These ruling families, once inclined to insularity, have in recent years made determined efforts to make their mark on the world. This is most evident in the many vanity projects embraced by the ruling families— such as the Abu Dhabi museum complex (Louvre Abu Dhabi and Abu Dhabi Guggenheim) and the Qatari plan to host the 2022 World Cup. It can also be seen in the Qatari ruling family’s growing collection of contemporary art, of which it has been the largest purchaser in recent years.¹⁰ What Qatar and Abu Dhabi do not share with Dubai is any shortage of capital. They can bail themselves out of their own mistakes. But their development models, like that of Dubai, rely on an abundance of foreign immigration; the Qatari demographic imbalance today rivals that of the UAE. The citizen populations of Abu Dhabi and Qatar simply are not numerous enough to create the glittering metropolises envisaged by their rulers. One solution, of course, is to offer citizenship to immigrants. But the Gulf monarchies have done little of this, and the logic of rentierism dictates that they will not start anytime soon. In a country with fantastic oil wealth, each additional citizen is one more person who gets a share of a fixed sum of oil wealth. In the next chapter, on Gulf labor markets, I explore this dilemma in more detail.

The problems of Kuwait have dimmed its attraction as a model for other Gulf states. In 1981, the merchant-owned Kuwaiti newspaper Al-Qabas could write on the eve of the first meeting of a newly elected parliament that Today’s celebration of democracy attracts the attention of all the peoples of the region, who look to Kuwait as a pioneer in various realms, first and foremost among them the realm of democracy.¹¹ In 2009, the same newspaper reviewed Gulf reactions to the political crisis of early 2009; a typical view was that Instead of the Kuwaiti experience opening the door for other Gulf and Arab experiments, it has become a source of fear for some, while others exploit it to warn against following on the same path.¹² Before the same elections, Khalid Al-Dakhil, a prominent Saudi sociologist, said that the Kuwaiti model had not lost its influence but that its example is a blow to the reformist current in the countries of the Gulf and Peninsula.¹³ A 2007 first-page headline in al-Qabas summed up the view of Kuwaiti capitalists: The Kuwaiti way of practicing democracy blocks development.¹⁴

But there are also other voices in Gulf society, voices less privileged and harder to hear, that have a different view of the Kuwaiti National Assembly. Gulf societies tend toward hierarchy, with the ruling families at the apex, prominent merchant families below them, citizens next, and unskilled foreign labor at the bottom. The Kuwaiti parliament gives a voice to citizens who otherwise would not have one; it does not empower the bottom of the hierarchy (the foreign laborers), but it does give the lower-middle-class citizens a voice. We can feel this viscerally when watching an interpellation of a member of the Kuwaiti ruling family, as the shaykh is grilled by members of the Kuwaiti parliament to the satisfaction of the assembled spectators. For a period in 2008, one of the most popular YouTube clips returned by a search for the al-Sabah (the Kuwaiti ruling family) was a clip of this exchange, in which a firebrand deputy (Musallam Al-Barrak) berated the shaykh; the clip was titled The Difference between the Kuwait National Assembly and the Saudi Majlis al-Shura. In the comments section of the website, one viewer wrote, I am from Saudi Arabia. Really I like this man [Musallam Al-Barrak] a lot.… As for the difference between the two assemblies it is large, and there is no basis for comparison. God bless. Another comment asked, Where is the comparison? The Consultative Council in Saudi Arabia is only a decoration.¹⁵

The other three Gulf monarchies are not as rich (on a per capita basis) as Kuwait, Qatar, and the UAE. They cannot afford to hire all their citizens as state employees at generous wages. As a result, class politics in these societies is of the more conventional sort—some citizens must find employment in the private sector, and thus they have a stake in the private-sector generation of jobs. Nonetheless, up until the Arab Spring of 2011, the rulers of these countries seemed more intent on following the Dubai model than on providing jobs for their citizens. This had something to do, no doubt, with their desire to compete with the other Gulf ruling families; it also had something to do with the privileged access of members of the ruling families to real estate. This gave the shaykhs and princes an interest in the pell-mell Dubai model of growth. But there is at least some evidence that the Arab Spring—more than the 2008 world financial crisis—was a sobering reminder to the senior members of the ruling families of the risks of policies tilted too heavily in favor of capitalists. For the past several years, the Saudi and Omani regimes have pursued policies intended to provide jobs for their citizens—which is to say, they have defied the interests of capitalists with the sort of resolution that is driven by fear for the stability of their absolutisms. In 2011, in direct response to the Arab Spring, the Al Saud forced the Saudi private sector to hire more than 200,000 citizens, an increase of 35% accomplished in less than a year.¹⁶

Plan of the Book

In the remainder of this chapter, I discuss the literature on the resource curse, focusing on how it deals with class politics in really rich rentiers. (This literature is also often called the rentier state literature, and I use both terms here to describe the body of scholarship.)¹⁷ In chapter 1, I explain the labor markets of Gulf rentiers and discuss their effects on class politics. I then turn to the issue of participation. In chapter 2, I show that the Kuwaiti National Assembly is, in fact, more powerful than the representative assemblies of the other Gulf monarchies; in chapter 3, I provide an explanation for this. There I delve into Gulf history; this history is crucial for the argument and it addresses issues crucial for understanding the current development trajectories of Gulf states.

In case studies of the UAE (chapter 4) and Kuwait (chapter 5), I combine the themes of the previous chapters. In chapter 4, I show what happens when an extreme rentier state has no parliament. In chapter 5, I show what happens when the citizen middle class in an extreme rentier has some political power. In the penultimate chapter I address the political science literature on the rentier state. In the final chapter I draw out implications for the future of the Gulf monarchies.

This is a work of historical institiutionalism in the sense that I explain the historical origins of an institution (the Kuwaiti National Assembly) and then trace the political and economic consequences of that institution.¹⁸ I make causal arguments using several techniques. I employ a structured comparison of cases that are similar on many variables but differ on outcomes.¹⁹ As David Collier, Henry Brady, and Jason Seawright recommend, I juxtapose this comparative framing with carefully-executed analysis carried out within the cases.²⁰ I rely, in particular, on process tracing to establish causal linkages between causes and outcomes.²¹ In this I employ strategic narrative, which Jack Goldstone describes as differing from straightforward narrative of historical events by being structured to focus attention on how patterns of events relate to prior theoretical beliefs about social phenomena.²² Thus, I provide historical accounts that pay close attention to what we should find in the historical record if a specific factor caused the outcome in question. Throughout, I evaluate multiple possible explanations for outcomes to draw my conclusions about which casual explanation best fits the historical record. All research methods in comparative politics require trade-offs, especially between asking interesting questions and providing certain answers.²³ Here I am asking questions that are important for the future development of the Gulf monarchies—for both citizens and expatriates—and the methods I use are intended to make the most persuasive case I can muster in answering these questions.

The Resource Curse

Over the past two decades scholars have produced a voluminous literature on the resource curse, much of it in the form of large-n regressions. This work has helped to clarify the concepts and theoretical underpinnings of the resource curse. It has not, however, done much to resolve the issue of the causal impact of natural resource exports on democracy. Instead, the results of dueling studies have often hinged on finer points of methodological technique.²⁴ The descent into methodological wizardry is understandable in part: the topic is not one easily amenable to quantitative analysis, which is why issues of statistical technique loom so large.

A number of scholars have suggested that the causal impact of natural resource rents on outcomes varies in different contexts.²⁵ The impact of oil on democracy may be negative when rents are combined with one set of variables but positive when rents are combined with a different set of variables. Regression models typically assume that rents have the same causal effect on democracy across all countries, varying according to the magnitude of rentierism and holding other variables constant. There are ways to tweak this assumption by running regressions on subsets of all observations,²⁶ or with interaction variables, though the latter strategy has not often been used in quantitative work on the resource curse.

If this is systematically the case—and I think it is—then we can either design ever more complicated regression models, or we can pursue case studies that try to trace the causal impact of natural resource rents in specific contexts. In this book, I do the latter. My conclusions have lessons for the study of rentierism elsewhere in the world, and I discuss these in the penultimate chapter. But I do not claim that the causal mechanisms that I identify operate in all rentiers. This is, I think, a strength and not a failing. If in fact the causal impact of rentierism varies according to context, we will learn much more through close examination of specific contexts than through the pursuit of general mechanisms that probably do not exist. Put differently: if context matters, and there are many indications that it does matter in ways that are very hard to capture in a regression model, then understanding the resource curse requires close attention to the varying contexts in which natural resource wealth is present. This book does just that, for the handful of countries in the world with the highest per capita rent revenues.

Extreme Rentiers, Middling Rentiers, Poor Rentiers

Not only do the causal effects of natural resource exports vary according to context, but they also vary according to the degree of rentierism. The impacts of natural resource rents are not only greater when there are more rents, but they are also of a different kind.

The measurement of rentierism has been the subject of much debate in the literature, and there is no wide agreement on just which cases have high values of rentierism. The foundational works on the theory of the rentier state measured what Annika Kropf calls resource dependence; these studies used measures in which rentierism is expressed as a fraction of something else. In recent years, in response to problems with these measures, scholars have increasingly used per capita measures of rentierism. Kropf usefully calls these measures of resource abundance, as distinguished from the earlier measures of resource dependence.²⁷ While measures of resource dependence are expressed as a percentage, measures of resource wealth are expressed in units of production, value of production, or something similar. Taking oil exports as an example, a measure of resource dependence is calculated as follows:

Resource dependence = value of natural resource exports ÷ GDP

Jeffrey Sachs and Andrew Warner use this measure in their seminal 1995 work on natural resources and economic growth. Giacomo Luciani, in his early 1990 chapter, uses a similar measure, defining a rentier state as a country that receives at least 40% of its government revenues from the export of oil or a similar source of rents.²⁸ By contrast, a measure of resource abundance is expressed in per capita terms. Using again the example of oil export revenues:

Resource abundance = oil export revenues ÷ population

The increasing popularity of resource abundance in the literature—instead of resource dependence—is a result of serious problems with the role of GDP in the measure of resource dependence.²⁹ A country in which natural resource income accounts for the bulk of GDP may have a great deal of natural resource wealth (say, Qatar) or it may have a much more modest amount of resource wealth per capita, but even less GDP from other sources (Angola). If this measure is said to cause a political outcome, it is entirely unclear whether the outcome is caused by resource wealth or by non-resource poverty. This creates a particularly tangled causal thicket. The only real solution is to attempt, as far as possible, to make the measure of rentierism independent of the size of the non-oil economy. The measure of resource abundance provided above does this, for the most part.³⁰

There is a second reason to prefer measures of resource abundance over measures of resource dependence. Countries can have a high value on measures of rent dependence if they have a lot of rents or are very poor (or both): Qatar and Angola can have similar values on the variable. If we think about how we would expect rents to have causal impacts on political outcomes, however, this does not work. Qatar has enough rent wealth to make its citizens quite prosperous. Angola does not. Measures of re source abundance capture this difference, but measures of resource dependence miss it.

FigureI_2.png

Fig. I.2 Rent abundance versus rent dependence, 2006. The most recent year with data available for all extreme rentiers is 2006. Values are calculated using rent, GDP, and population data from the World Bank. The rent data series in the World Development Indicators is total natural resource rents (% of GDP). This data series is an estimate of all rents derived from natural resources, including coal, timber, minerals, natural gas, and oil. The value for Turkmenistan is inexplicably large, at 161% of GDP, and it has been omitted from the chart. Countries appear by name in the figure if they have a high value on one measure; otherwise, they are represented by a +. World Bank, 2012, World Development Indicators,